REOs dominate many markets

The foreclosure market "is the housing market" in 2009, analysts at Deutsche Bank say in a new report that's skeptical about the effectiveness of the recently passed $787 billion stimulus bill to revive housing markets. The report warns of the lurking "shadow inventory" of real-estate owned (also known as bank-owned or REO) properties and homes slated for auction that haven't showed up in multiple listing service (MLS) data. That inventory could put continued downward pressure on prices, making the $8,000 tax credit for first-time homebuyers a less-than-compelling incentive for some buyers who expect to see further declines in their markets, the report said. In eight of the 26 markets analyzed by Deutsche Bank analysts Nishu Sood and Rob Hansen, foreclosure inventories outnumbered MLS listings (the report counted REO properties and homes scheduled for auction, and assumed two thirds of "preforeclosures" would end in foreclosure). Five of t...